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Squawk on the Street

News/Business. Melissa Lee, Carl Quintanilla, David Faber. Opening bell market action. New.

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U.s. 27, Us 24, Google 23, China 17, Ibm 11, Carl 11, Davos 10, Jim 10, Apple 8, Morgan Stanley 8, Europe 7, Eric 6, Motorola 6, Ron 6, Dell 6, Nokia 5, Jamie Dimon 5, Imf 5, Frank Lloyd Wright 5, S&p 5,
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  CNBC    Squawk on the Street    News/Business. Melissa Lee, Carl Quintanilla,  
   David Faber. Opening bell market action. New.  

    January 23, 2013
    9:00 - 11:59am EST  

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welcome back, everybody. we asked for a better phrase than kick the can down the road and you responded. bill said it should be run from responsibility or failure to do the job. it warrants at least a dock in pay. it should be pushing the pig to the trou. jason said congress has redefined the term.
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he calls it, they pulled a congress. waiting for goodow, and a lot of others said sticking their heads somewhere else. it's trough. >> jim, thanks for coming on. we'll see you on the set in pebble. >> thank you for having me here. i appreciate it. >> thank you for coming. join us tomorrow. "squawk on the street" is next. good wednesday morning. welcome to "squawk on the street." i'm melissa lee, with carl quintanilla, jim cramer and david faber here at the new york stock exchange. take a look at u.s. futures. we should note the dow is posting its bst january in 17 years. we are looking to go higher on the dow here. investors are awaiting the house vote this afternoon on postponing the debt ceiling. news in europe, david cameron vowing a referendum on whether
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britain remains in the eu. in japan, longest losing streak in two months. china awaits data, that's out tonight. the road map in the u.s. starts off at the golden arches. u.s. same-store sales up 9% for mcdonald's, helped by the dollar menu and mcrib. >> ibm and google surging premarket. google gets its price target raised by six firms this morning on better than expected earnings. >> coach getting pummeled this morning, blaming its big earnings miss on weakness in north america during the holidays. it says it is transforming itself into a lifestyle brand. >> apple's results tonight after the bell. could this be the quarter that marks the bottom on the stock. will tim cook talk about the next omg product in the pipeline. we'll start with mcdonald's. it earned 1.38 nds the fourth
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quarter, it exceeded estimates. ceo don thompson said for the near term, mcdonald's expects top and bottom line growth to remain under pressure with january global comp sales expected to be negative. jim, it's come a long way since the mid-80s here. still pressure on margins. the dollar menu is tough to sustain. >> you've got to put yourself in the heads of the buyers. i think the buyers say, look, in the end, it was better than expected. the stock was a terrible performer last year. they have to get it right eventually. it can't be as terrible as it was in 2012. not a great reason for me to buy. but obviously the market is cheery. >> somebody wrote me back on twitter, saying, i'm not loving it, i'm look it okay. >> like it. >> the u.s., interestingly, was not the problem this time around. it may have had something to do with being open on christmas day, pushing the mcrib in december rather than january. give us your enthusiasm level.
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>> i don't have much. i just think that there are a lot of stocks that have moved up a great deal. so you might be looking for a stock that hasn't moved. this one hasn't moved. you could argue they're starting to get it together a little more. they obviously promoted the dollar deal. it brought people in. again, i think people are really searching for something to buy. they're willing to buy things that aren't necessarily high quality here. >> i think there are a couple of questions when it particularly to december comps. last december was a very tough quarter because it saw 9.8% rise in sale. but they pulled the mcrib in december. in terms of the store opening on a day by day basis, it may not necessarily be comparable -- there's the mcrib. i haven't had a mcrib in five years. >> i know. but you speak about it very enthusiastically. >> that is true. the other issue at mcdonald's is what a lot of other food companies hf highlighted, and that is rise in costs. brinker yesterday talked about
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it. they're in the casual dining space as opposed to the quick-serve space. when you talk about rising costs, you have to wonder about margins for mcdonald's. >> look, take a look at some of the stocks coming by the ticker. novartis is up. the chairman leaves. so maybe something good happens there. parker reported one of the most disappointing quarters on friday. everything was bad. everything. the stock went up. this is just part of the animal spirit's moment. you get caught up and say, all right, i'm going to find a reason to justify buying mcdonald's. i'm going to say that i'm not going to look through it. they beat the number. and that's what's been going on. >> yeah. >> people find reasons to buy. because they want to be in this market. >> that's a reflection more of the market itself. >> that's my point. >> at what point does that potentially end, or is that something that's going to be
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sustainable? >> go into some of the quarters and say, look, don't worry about the second half. dupont yesterday wasn't that great. but the top number was good. like mcdonald's. she came on, ann coleman, said good things about the second half, tio margins bottoming. all of a sudden you've got a story. if somebody downgraded dupont today, people might say, that's my opportunity. people want to be in stocks that are still down from their highs, whether it be the october highs of last year or the highs of 2011. >> the question i have, is this a mcdonald's story, is this a sector story? do you not like the restaurants in general? it seems a lot of the headwinds that face mcdonald's face the rest of the industry. maybe it extrapolates the rest of the industry has problems as well. >> chipotle did have problems. chili's, nothing exceptional at all. one thing tossed out, they're not building any chili's.
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we have enough chili's. >> saturated. >> we don't need anymore. >> we're overchilied. >> or chilied just enough. >> in all of american media is the graph on the cover of "usa today." likelihood we'll trim spending in the next six months in eating out, 59%. that's a large number if you look at the next six months. the consumer confidence would back that up. >> look, i go into mccormack and watch that stock all the time. that's when you want to cook at home. that does very well. i also see stocks, again, like pinero where people are going out and liking it very much. darden seems to be missing the execution. people aren't going to olive garden as much as they used to, red lobster. very uneven what's going on. >> yeah. on the brinker call they talked about disconcerting trends of people not going out as much. it seems like it's --
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>> overall, jim, you make the point, people want to chase the dips. the ten-year is up above 18. vix at a five-year low. i think people are being worried to being led to slaughter. you don't think that's happening yet. >> coach is bad, no two ways about it. coach is terrible. so coors goes down. i think at the end of the day, people say michael coors is winning. because nordstroms didn't report a bad number. tiffany's. there is other jewelry that's good. execution is playing a big role. the execution for coach is horrendous. it's horrendous. i don't really know what happened. lou frankfurt is a good manager. i just can't grasp it. >> it's been going on for a while. >> it was an $80 stock in april. >> right. >> now it's a $50 stock. >> obviously taking a hit in the pre-market, the luxury goods
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maker said it earned $1.23, below forecast. revenues also missed as jim said, lou frankfurt said the holiday season proved challenging in north america. comps down 2% in the quarter. over the last decade they said we built coach into a leading accessories company, now transforming it into a global lifestyle brand anchored in accessories. >> that's anchored in couponing, which is what i hear they're doing. i find when -- look, there's many ways to tell -- to put a little lipstick on the pig. this was just nothing that i want to buy. maybe someone says, you know what, next quarter will be good. but i just -- i'd like to have a little something to hang my hat on here. i don't have it. >> accessory or lifestyle -- >> my fossil. >> july 31st of last year, it opened down 19%. >> wow. >> i don't know if you remember that day.
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we've been down this road before with these guys. >> there's a level of consistency that's starting to bother me. >> what's that reflective of. this is a management team that has been lauded for years as having been ahead of the curve, having appropriately merchandised this company. and so how do you suddenly start missing it? is it focus? is he doing something else? what's going on? >> ugg's was great for a long time. developed the rockport brand, and then it cooled. maybe coach, like tiffany, is old. maybe there's an old theesis in this market. >> maybe it's oversaturated. frankfurt did talk about maintaining their pricing strategies, despite the retail climate which protected their brand. it sounded to me not like couponing, but maybe the opposite, maybe they didn't coupon enough. >> someone about six feet from
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me opened a bag and it was couponed immediately. she went on -- i was like thinking exactly that, that they're preserving. nicole was saying, listen, you can believe that, or your eyes could be lying, because i've got a coupon for my coach bag. >> we need a nicole cam is what we need. we could just go to her all the time. >> this is not the coach bags that you can get on canal street. those seem like the kate bags that i see on canal street. they may not be as -- >> not as high quality? >> no, like the watch i bought down there for ten bucks, which worked all the way to the subway. the whole way. >> wow. sounds like a block or two. >> once you got on the subway you couldn't get off the subway, it broke. but i got at least a solid six minutes. >> how much is that per minute? $5 a minute? >> does it make you want to buy kors more or less?
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>> god bless you. >> thank you. >> you have something i don't want to catch. >> i'm actually very healthy. but sneezed. >> i think that, you know, what happens here is by midday, someone comes out with a, hey, listen, i talked to kors, or it's a quiet period but i think it's okay. look, this luxury end is very challenged. i would rather buy nordstrom than kors. i don't mean to punt like that. i don't mean to slide with my leg and trip and read like that. like tom brady who wears uggs, which, by the way, is a mistake. >> my pal? >> that's true. >> we do hang out together. yes. and married to supermodels. >> you take your life your hands when you say, listen, i know kors is good. my supposition is kors is doing better than coach. that doesn't necessarily produce something that's good, because i've got so many companies that have reported really good numbers that you can buy. like a travelers. i think travelers can go
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dramatically higher. travelers is an insurance company, it's really boring. it was an unbelievable quarter. so i switched directions, played generals and said, i would rather not buy kors, i would rather switch to insurance and buy a stock that could go up dramatically. jake fishman is a great businessman who doesn't promote himself. lew frankfurt is on tv a lot. i love lew. everybody here on tv loves lew. fishman knows how to put together a quarter. >> you love lew, don't like the stock. >> i like david novak. people sell young. even though coach wasn't bad in china, will they now sell young. because people extrapolate everything. >> we're going to get to google and ibm and talk apple tonight. in the meantime, we've given you the lowdown on mcdonald's. how is business at pinera?
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we'll talk to their co-ceo. and james gorman live from the economic forum in davos. what will he do for an encore after his firm's blowout quarter. futures trying to muster enthusiasm here with the dow opening up 33. "squawk on the street" back in a minute.
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analysts were encouraged by a rebound in online ad prices. they're expressing concern that the faster growth is growing in google's lower margin businesses. fourth quarter products of 539 a share. and growth in emerging markets. big blue said it used current earnings below wall street estimates. ibm and google helping to put juice under the futures this morning, and helping the dow on its streak. it is the best january. dow up 4% so far. >> ibm is a -- it's a reset for us. because we spent a lot of time talking about sales. and the idea is if the sales are to good, you should sell the stock. ibm is the exact opposite of that. this stock has moved from 125 to 200 on not great sales. what they've done is make a fortune with what they sell. when you have gross margins for software you'll make a lot of money. they had an aggressive five-year
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plan for 2010, because 2015 you earn $20. now it's going to be easy. it was a lot best call. people recognized that they figured out a way to do acquisitions, buy back stock, do a good dividend and make a lot of money. >> the bears countered today, how long do you sustain relatively flat revenues. >> right. >> with bookings that are showing snamaller and smaller growth year over year. >> the answer is, you won't have to sustain them because they're going to go higher. i was gratified by ibm's call. by the way, jim was not on the call. i also like that level of confidence, frankly. but this was a terrific, terrific layout of what they're doing right. social clout, selling some hardware, new products coming out. i said, why is that stock going up? sales were light. the answer is, because they are making fortunes. >> i think the question this morning is on valuation. i know isi's brian marshal said, what do you pay for a mature
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company with minimal revenue growth that promises about 10% eps growth. he came to the conclusion that around 190 it's fairly valued. which is below where it's trading right now. >> it doesn't help us. where does that get us. obviously what we're trying to do -- mcdonald's, i'll pay 87 for mcdonald's. dupont at 43. you've got to deal with the reality, which is that people were surprised. the last quarter was really bad. and on the conference call, people said, wait, what happened? the answer is, well, business got a little better. we said there was pushback on some orders. sure enough, it was pushed back. i think we're all struggling to deal with the realistic nature of how can we justify these moves. how many stocks have been downgraded because they hit the price target. the answer is, in a real bull move, which i think is what we're having, you end up saying, 3m, i downgraded in 92, i guess i have to upgrade at 105.
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united technologies. when they reported immediately, the stock was down. it was like, no, the orders were gray. i'm not trying to alibi the market. i'm saying the analysts better provide some value out of here. i'm not getting it from a lot of analysts who are saying, you know what, i really like -- if home depot goes to 47, i'm all over it. thanks for nothing. >> we should mention alice raising their price target on google by a lot. >> by a lot. >> reporting after the bell yesterday. in speaking to a couple of the owners of that stock this morning, you did come into the quarter with relatively muted expectations. someone said to me if we don't see at least 10% sequential growth from this company, maybe it doesn't deserve a growth multiple. cpc rates of decline are slowing. the cost per click, while at the same time you have click who are growing. on mobile, you're more likely to
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click if you're looking for something, looking for the movie opening, looking for the restaurant. you're more likely to click through. more opportunity perhaps from mobile in a sense. generally speaking, it seems to have been a positive quarter. and being well received by investors. >> they're talking about profit. they're even in china, by the way. that's interesting, because people don't think about them in china. this was a great line, just a bit of color on motorola. just to remind everybody, we do care about profitability. i've often spoken about this company being in its own world, where they don't want to play by the rules, but here they go. >> motorola is not profitable yet, but they're taken the loss down appreciably. >> we're not in the business of losing money. >> i love that quote, that was my favorite quote. >> amazing how many businesses have had to say that outright. instagram, google.
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it's a good starting point. >> look, i thought the mobile was really good. if you come away from the quarter saying, another one. we were down 100, and we know what we're doing, and we've come back. facebook, we didn't know what we were doing. give the benefit of the doubt to google, because that last quarter was not so great. this last time they did a good number. i like the number. >> yesterday we showed you how cramer was right about the fed back in 2007. you'll want to hear his take on some stocks worthy of mention. futures moderately up here. more "squawk on the street" when we come right back. but we can still help you see your big picture. with the fidelity guided portfolio summary, you choose which accounts to track and use fidelity's analytics to spot trends, gain insights, and figure out what you want to do next. all in one place. i'm meredith stoddard and i helped create the fidelity guided portfolio summary.
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about six minutes to the bell. we're waiting in earnings, jim, the "mad dash" focusing on rails, too. >> on "squawk" this morning, csx and norfolk southern, this is an endless story about how coal is killing them. down 18%, 19%. listen to the president. the president is determined to make us a less coal-based country. and i've got to tell you, this is a coal-based country. but ksu, kansas city southern, okay. they have coal. but they also have auto. the other guys have auto. but they have mexican auto. there are four new gigantic plants being built in mexico. they have tremendous business with sand to fracking to get oil
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out of eagleford. this is the one. i know it's up a lot, but people want growth, carl. only kansas city has growth. >> csx did make comments on auto. growth would be good, but not as good as the back half of last year. >> auto is up a little. how often can you shoot the lights out. they do favor general motors. i'm saying that the rails as an indicator of the economy, may be failing, because they are so coal-based. but union pacific reports tomorrow that is less coal-based and i think they blow it out. union pacific is a winner. >> interesting point. we'll get a lot more after the break. stick around. we'll see how mcdonald's opens for trading now that we've got their earnings comps. speaking of restaurants, we'll talk to ron shaich about the state of his business and what's new at the chain. [ maleu turn an entrepreneur's dream...
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bell to ring in about 1:20. it could be a big day for the dow. the best performance for january for the dow in 17 years. some of the big gainers, hpq, up 20% for the month. travelers up 9%. cat up 7.5%. >> utfs, talking about, i've been worried about the helicopter. they guided that up. the orders for otis were very strong. >> yeah. >> you've got spare parts. it's been the bain of a lot of companies' existence. >> you talked a lot about the danger of the downgrade. bernstein ups costco. even they say valuation is still elevated. currency less than a drag. >> here's the value added.
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what do you do. how do you sneak it in. how do you get back on that horse. [ bell ringing ] >> celebrating the release of their new album. and celebrating india's 64th republic day. wow. there you have it. looks like most of these s&p 500 companies opening in the red right now. shares of dell are moving slightly higher, david. that is all over the newspapers today. of course, a day after you first reported the microsoft/dell combination. >> microsoft in talks, as we told you yesterday. of course, not much new to add at this point. many of the news organizations also having their own reports here after we told you about it. with the conversations involving microsoft investing. what could be as much as $3 billion. i was given a range $1 billion
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to $3 billion. the deal itself continues to move forward. my sense is, having spoken to people close to the transaction, if we don't hear something perhaps even by the end of the week, you may start to see temperatures rise among investors, oh, is there a problem. prices still, my understanding, still being negotiated. we talked about a range of 1350 to 14. bloomberg is out with 1425. they've added a quarter to their range in terms of who they're talking to. if you look at dell at this price, time, value, money, risk, everything else, 1311 on the stock, you know, not clear how much upside there would be from here on. let's call it a $14 deal, even if they get to that point. >> are they talking to the justice department? >> i don't think so. microsoft has made plenty of investments in the past, whether it be a nokia in some regard, or comcast many years ago, or even apple computer way back when.
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not to mention barnes & noble. i don't know if you talked to the justice department. we'll have to see. as i described it, and sources told me it's going to be a mezzani mezzanine-like financing. not necessarily a straight common equity of any kind, or straight equity in this overall leverage buyout. i think we need to wait and see what they end up with. >> microsoft is competing against hardware at hewlett-packard. now microsoft, someone could say they're going to get preferential treatment. dell, maybe reduce windows 8. i think it's problematic. >> it leaves them as a creditor/minority investor? >> i wouldn't like it if i competed against dell and saw that. i wouldn't like it. >> you would look at google instead. >> google, by the way, you talk about chrome. i love it. there are so many things i loved about the google call. if they can get the temperature thing down, it will be the first
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company to put somebody on the sun. >> they're still driving cars, i'm telling you. >> that was a big part of the call. your pocket super computer powered by google. pocket super computer. the chrome. the wonderful chrome. there was so much to like here. i'm not being facetious. i think google is a great company. >> when the numbers first came out, you saw the revenue miss and then you look at the cost per clicks declined much less than what analysts had anticipated. so that certainly was, you know, a bright spot. total advertising revenue up 19%. we're seeing the stock trade higher in today's session. >> facebook goes higher. i don't know why that would be a takeaway -- >> you know, mobile in general, more of an opportunity, a growing ecosystem. everybody's more comfortable with the ads and clicking through ads. >> it used to be digital dollars
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for your -- >> right. it was digital dollars for analog dollars. >> and then people started to get across the margins. it's funny, people at home are probably saying, i picked up the paper and they said google is bad. it was. the story read, listen, google missed. ibm missed. i mean, it's much more sophisticated than that. there are different things like apple, we're looking for different metrics. does apple cannibalize with the mini, did it cannibalize the ipad. people keep making that mistake, and the headline writers keep making that mistake, it's why so many of our viewers are confused. i thought google was bad. no, google was terrific. >> asking what to do with annie's today. recall on frozen pizza. metal shavings found in the dough, not the finished product. >> the metal shavings thing is a
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bummer. you never want to see that, whether it be a pharmaceutical product, or -- no. you don't want those iron filings, or iron flings -- when i was a little kid, when i had my first chemistry test. >> j & j -- >> 40% knew? this is almost -- >> difficult for a year or two? >> what do you do when you have a hip already inside you? >> cramer does. >> really? >> it's a shame. you have to sue them in a class action sue. j & j said they'll replace it. this is a really horrible thing that has happened here that's been perpetrated on people. many people went in and had these devices, they were supposed to last a lifetime. they lasted about as long as as that watch i bought on canal street. >> i do want to get back to apple. the call had just begun, and we did learn more during that call
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from verizon. the activations alone of apple products, apple phones did seem to be a positive for apple. some people trying to look into the google quarter and see a read there. there you look for traffic acquisition costs. which did not go up that much. now, it's somewhat complex, but google splits its -- how much it gets from the advertiser with apple when it's an apple device. they get a much bigger take on an android device, that is google for obvious reasons. android is their software. their acquisition costs which had been 6% not that long ago had been trending up dramatically, but flattened around 7.3%. some are taking that as a sign that people are accessing more ads on android de voivicesdevic. >> what did you think about the maps comments? how much people loved the google maps? i loved it. the google map product, if you haven't used it, it's so
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spectacular. you can look up your house. i've looked at your house many times. >> really? >> and i've been waving to you. >> my mexican house is on there. >> when you're in a foreign country, it's extraordinarily valuable. >> it's fantastic. >> it gets the eiffel tower right, i can tell you that. >> that's kind of an easy one. >> you would think. >> not necessarily. >> business up 22%. mobile ad rates, a lot of things to like about the google quarter. >> research in motion, by the way, surged to a fresh 52-week high in the session. higher by .9 of a percent. citi out today reiterating that we acknowledge the fact that sentiment is going to improve going into this launch on january 30th. but the reality is, sell through actually matters. how many devices will they actually sell, which is why citi is sticking by its sell rating. 18.08 is a high in this stock. >> ray is very much a part of
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what i'm talking about for 2013. r.i.m. used to be at 70. i can buy here. nokia used to be at 50. i can buy here. hewlett-packard down 44%. let's call the bottom. best buy, can't be that expensive. this whole idea of give me something that's not at its high is pervasive in this market. pervasive. >> brian shactman is on the floor with a whole lot more this morning. >> carl, interestingly, dow up 48 points. but if you took how ibm, the dow would be negative. the s&p is basically flat. you have some strength in the nasdaq, which is positive. but again, a lot of that could be fueled by google. big companies with big positive earnings driving the overall market here. the dow, especially, we've talked a lot about coach. look at the collateral damage, if you will, from some of the luxury retailers. tiffany, ralph lauren, sachs, all down. tiffany more than 1.5%. we talk about the new highs. the transports has been
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airlines. u.s. airways, lcc, strong numbers on the top and bottom line. that stock up about 2% in early trade here. i want to add a little insight into annie's. well off the pre-market lows. still up about 90% from the ipo. maybe some of that -- jpmorgan came out and said we'll lower our estimates, but we're going to reiterate our overweight rating, and encouraging people to buy the dips on this stock. obviously down significantly, but well off the pre-market lows. eli lilly, stomach cancer drug did extend survival rates beyond the placebo, but only by two months. it was not positive enough. that's why it's trading down 1.5%. whenever i'm down here at the floor, jim, i like to keep an eye on the dividend raisers and what the companies are doing with their cash. wells fargo, comerica, increasing dividend close to double digits. basically wells fargo said they want to do more. we're just waiting for approval from the fed. back to you. >> brian, i thought wells would
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go up more. this stock seems to be cursed. no matter what they do. people seem to like it. a great point that you raised. that's what we should be looking at. let's go to sharon epperson at the nymex. >> wti prices under a little more pressure than brent crude at the moment. as you mentioned, this is after a very overbought condition, technically we're looking at multi-month highs here. we're watching what's coming out in terms of china data. saying that china's oil demand was at a record level in december. we'll get pmi data from china that will give us more indication of perhaps where the oil market may be headed. right now, though, a lot of the market is focused on what's happening right here in the u.s. we told you about the nebraska governor approving part of the keystone xl pipeline that would be going through his state. the obama administration has to weigh in, and that could take until perhaps after march, until they actually decide to do that. this is a pipeline that will take 830,000 barrels of crude oil from canada, oil sands to
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the texas gulf coast. but a number of analysts weighing in on what this will mean for oil prices today. we're looking at morgan stanley saying that when you look at what is happening with, not just the keystone pipeline, but pay attention to what's happening with the seaway pipeline, there's still a glut of oil from oklahoma because of what's coming from canada. that is going to maintain a level of this spread between brent and wti in the mid-teens for the first half of the year. so that's what they have to say about it. back to you. >> thank you, sharon epperson. panera bread has given competition food for thought. ron shaich on what is new at the fast-food chain, coming up next. and this morning's early movers. top of the list, intuitive surgical, up 9%.
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shares of panera bread up 14% over the last six months. the franchise set to announce fourth quarter earnings in early february. ron shaich is the co-founder and ceo of panera bread. ron, we're hearing variety. people aren't going out as much. two, there's been tremendous food inflation. why am i not hearing either one of them from you? >> well, the truth is, jim, we just keep chugging along. panera's been a positive factor that has driven the success of this company for many, many years. i think as you know, last quarter earnings were up 28%. comps were strong. we continue to move forward. >> ron, some of the same commodities that some of the other guys who were really grousing about are very important at panera. what did you do to make it so that you've mitigated that increase? >> well, we're reasonably diversified in our commodity basket. we're not at the effect of any individual commodity.
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and frankly, we've had enough pricing power that we've had the ability to adjust prices, at least in accordance with inflation. >> okay, ron, also, we're hearing from a lot of the restaurants that they already have too many restaurants in the united states. you've got room to open a lot more paneras, don't you? >> well, we've continued to open a bakery cafe every 72 hours or so, for the last half a decade. and we continue to be able it do it, jim. we're going to continue openings as long as consumers respond. the truth is, consumers have been visiting paneras, the volumes of our new cafes in 2013 have been the highest in our history. excuse me, our volumes in 2012 were the highest in our history. 2011 were also the highest average weekly sales we'd ever seen in new stores. our productivity continues to get stronger in new cafes. we continue to open. >> ron, when i read between the
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lines on your commentary about pricing, to me it sounds like you've been raising prices. but at a certain point the consumer could push back. are you getting to the point where you might be concerned that this flexibility in pricing is running out? >> well, melissa, we've been adjusting prices consistent with inflation. and when you recognize that panera's average consumer has got an income of $75,000, essentially, our consumers are not going to save their way by brown bagging their lunch back to financial health, shall we say. so i think that consumers understand inflation is part of the package. and are willing in modest dosage to accept it. it's certainly been the history of panera. in fact, we quarterly survey consumer sentiment on value, and the value scores on panera have remained over the last five years. >> ron, are you seeing a movement -- let's talk about the
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health. you've got some very well-posted calorie menus. you've got a 417 calorie asian chicken salad that is terrific. are you seeing people staying away from the high calorie and going for the low calorie? >> jim, you know it. just like your investors, consumers are intelligent. they understand. all they want it do is be treated with respect and dignity. the way we do that is we give them the information. there are others, a broad swatch of panera's menu that is very good for you, low calorie, low fat, really very, very good. you can eat very well at panera. there are also items that are inactual gent. we let you know to make your own decisions. >> how about bread. because a lot of -- there's a commodity. i know you talked a lot of times about how you're able to make it there's no surprises with things like bread. costs. >> yeah. we post the calories on bread. i think that the important thing about panera is that bread is
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where we come from. we're artisan bakers before we started. all of our food has to be as good as what artisan bakers would produce. now, you may not come in and get bread at every occasion. you may decide that's not the way you want to eat it, you may want one of our specialty salads. right now we're doing a power spinach salad to die for. baby spinach in a light dressing. it's really good. i encourage you to come in and try it. >> i'll probably do it this weekend. panera cares. i like panera. in boston, should i visit that one when i go to visit my daughter who lives a block from you? >> we're opening our fifth panera cares. this is an extension of our community efforts. as you know, we've had phenomenal success by being part of 1,700-odd communities across america. we got very involved in the issues of food insecurity. we donate all of the leftover
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bread and baked goods every day because we bake anew. when you recognize that one in four kids in america don't know where their next meal is coming from, you understand the issues. we decided to open and join the community cafe movement. what that means is these are cafes of shared responsibility. no set prices, jim. you come in, it's a full panera experience, you pay for it, however you want, in a donation bin. the amazing thing, we served 1 million people in these cafes, 20% of consumers pay more. they pay so someone else can enjoy the panera experience. 60% leave the suggested donation and 20% leave less, significantly less. they're the ones who are in need. bottom line, we're able to elevate and provide an elevated experience for everyone with dignity. >> that's terrific. ron shaich, chairman, co-ceo, panera bread, the best performing restaurant stock of the year. thank you so much, ron. good to see you. >> thank you so much, jim, melissa and carl. >> revenue expectations, coach
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chairman has high expectations for the company. and had this to say in the earnings press release. over the last decade we've built coach into a leading international accessories company. we're now transforming coach into a global lifestyle brand. anchored in accessories. that brings us to this morning's squawk on the tweet. coach has already wristlets, which carl has on right now, hats, belts, key chains, and even accessories for your iphone and ipad. what other accessory could help them become a global brand. we've got your responses throughout this morning. >> it's been a tough four months for -- we're going to find out. apple investors. could the iphone makers get a bottom of the stock. but up next. the stock market can be quite a circus. and we have the ring master. jim cramer and his 6 stocks in 60 seconds, taking center stage
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when "squawk on the street" returns.
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days like today, we need a segment called 160. but we can only settle for six this time. >> senovas is a stock a lot of people were speculating in. cheap bank stock. a bunch of guys don't like it. i think they're wrong. i think this is going to go higher. >> texans tough to read? >> it's like, if things aren't so bad, they guide below the street. that's not the way to get the story home. >> unilever. >> this guy may be the greatest consumer package goods guy. and we've got the mini dios. good luck. >> matt pharmaceutical. >> all eleallergen wants to own migraine market. >> kvh. >> be careful. there's equity offering coming.
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>> so you're going to be looking through numbers all day long. what's tonight? >> we'll talk about derivatives of the rails. because even though the rails have coal, there's other parts of the rails that are making a lot of money. and we're going to look into them. >> busy day shaping up. >> always. very exciting. of course, we know who reports after the bell. >> apple, netflix and a lot more. we'll see you tonight, 6:00 and 11:00. we'll talk morgan stanley's ceo james gorman from davos, switzerland. keep it right here. obligations. i need to rethink the core of my portfolio. what i really need is sleep. introducing the ishares core, building blocks for the heart of your portfolio. find out why 9 out of 10 large professional investors choose ishares for their etfs. ishares by blackrock. call 1-800-ishares for a prospectus which includes investment objectives, risks, charges and expenses.
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optionsxpress by charles schwab. welcome back to "squawk on the street." let's get a road map for the next hour. we'll start with some tech. google posting better than expected earnings, helped by a boost in ad revenue. companies leading the tech sector right now, is there still time to jump in. no love for luxury. coach sales disappointing the street. shares are sinking today. are the cracks in the high end getting even bigger. jpmorgan's jamie dimon speaking about the whale trade. we'll go to davos for his
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comments. simon hobbs is out on assignment today. he'll be rejoining us tomorrow. >> we look forward to that. breaking news for you now. imf in with their outlook. hampton? >> good morning, david. let's get right to those headlines. updated outlook from the imf. it saying among other things it looks at global growth projecting to increase in 2013, but at a more gradual pace than the previous projection back in october of 2012. policy action in the u.s. and europe have lowered the acute crisis risk, but the recovery is going to be protracted and delayed. it notes japan did slide into a recession, but the stimulus measures there are expected to boost growth near term. modest growth expected in some emerging market economies, others still struggling with a lack of external demand and domestic bottle necks, overall the imf saying if the crisis risks do not materialize and financial conditions continue to improve, global growth could be
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stronger than projected. however, the significant downside risks remain, the setbacks in europe, and excessive near fiscal consolidations in the united states. concerns about like the sequester, entitlement and tax reform. policy action must urgently address the risks in the u.s. the key imf forecast headline numbers, 2% growth for the u.s. in 2013, rising above trend in the second half of the year. the forecast for europe, that area revised downward. expected to contract by .2 of a percent in 2013, rather than expanding by a modest .1% back in the forecast in october. no downgrade of growth in japan, despite renewed recession there. forecasts still for 1.2% growth in 2013. and finally, the prescription for china, sustaining a rapid growth, progress on market oriented and structural forms there and more emphasis on private consumption inside
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china. back to you guys. >> hampton pearson, thank you. google shares up sharply this morning after the company beat estimates in the earnings, setting a surge in ad sales profit. both gentlemen this morning have raised price targets on google. you raised your rating to $900 a share. the price target, that is. you've got a buy rating on the stock. in terms of google, the valuations at this point, 16 times forward pe, motorola still in your words a work in progress. why should investors get in the stock right here? >> well, for a couple of things. remember, motorola is really a work in progress, but a very new acquisition. you've got to focus on the core search. it's still growing 15%, 20%, even after 10 years or 12 years of business. displays a brand-new business for them. they've only been in it in the last three, four years.
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by our estimates it's already doing 6 billion to 7 billion gross revenue for that division. so, you know, a few years ago, a couple years ago, google was beaten over the head because people were talking about it being a one-trick pony. the search is not now decelerating all that much. they have this really great growth story in display. only number two to facebook. motorola is a work in progress. they're not out of the woods there for probably several quarters. but we think investors understand that. and they're buying it this morning despite that. >> james, you've raised your price target to 7.70 from 7.40. as yousef said, there's healthy growth in paid clicks, in costs per click. the decline was a lot less than what the street was expected. total ad revenues up by about
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19%. why neutral on the stock? >> yeah, i mean, again, the revenue trends are good near term. they came in the way we expected. stronger than expected revenue trends. i think that's going to help the stock near term. i think, you know, over the longer term, you still have to look at the fact that estimates on a consensus basis for 2013 are lower now than they were six months ago. the stock's approaching 7.40 from under 600. margins, once again, seem to be something which come under pressure, compressed again year over year in the quarter. i think that's a longer term concern that investors have. what's the long-term economics of the business as google keeps investing in it. >> yousef, facebook shares up sharply this morning on the back of google. is it that mobile is improving, that people are actually mon monetizing off mobile? or google is actually taking a
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share and could be a challenge? >> i think google is probably taking shares, but not from facebook. we actually believe facebook remains our topic. i think the reason it's up is what google numbers tell you is that advertisers are willing to advertise. mobile is not the risk that everybody thought it was, either for google or facebook. and consumers continue to spend. and back to the valuation issue, you really have to look at google relative to the overall market. this is still a company that's growing 15%, 20% with improving margins over time. and yet if you strip out the cash, it's trading cheaper than the s&p 500. it's trading around 12 or 13 times on the 2013 numbers. so we think it's cheap. >> to what steextent, if any, investors should keep in mind, obviously not returning any cash, $48 billion to shareholders, they can occasionally take such as a
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motorola mobility that surprise people at the very least. is that at least part of your construct when you approach this stock? >> yeah. i mean, i think that is an issue. look, google is growing, what, 24% on an apples-to-apples basis in 2012. it's a very fast growing company. they're still in growth mode. so they need that cash to be able to have the flexibility to make acquisitions, or investments big and small to grow the platform. but there is the risk that they do things which investors don't immediately see the value in, especially when they have that much cash. >> james, i'm just curious, what is your top pick in the space, compared to google? >> i covered the advertising in the media market more generally, so i think right now, there's an advertising agency in the ticker itp, that's attractive, because it's a play on global
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advertising growth. there's potentially a lot of margin upside there, which could make the valuation fairly attractive, you know, whereas i think it's harder to see what the margin upside is for google. obviously they're different businesses, but you asked for my top pick, and that's what it is. >> guys, we've got to leave it there. thank you. coach getting pummeled after a big miss on earnings this morning. as the lux re retailer claims, it's becoming a lifestyle brand. what does that mean for the high-end name moving forward. jamie dimon speaking out live in davos on the whale trade. we'll bring you those comments a little bit later on. the
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. shares of coach slumping this morning. if 14% is a slump, after missing earnings estimates on weaker than holiday sales. they said they'll be transforming coach into a lifestyle brand. jennifer davis joins us this morning on the cnbc newsline. jennifer, good morning. >> good morning. >> obviously a lot of people have words for coach, frustrated shareholders. you think this is something of a rebuilding year for them, right? >> yes, i do. and i see this weakness as a great buying opportunity. very strong management team.
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we believe in the long-term viability and strength of the brand. this year they're making investments in, as you said, kind of expanding into more of a lifestyle brand. also acquiring their sarah palin distribu -- thir international distributors. we saw sales slow down over the holiday season across retail. so i don't think it was anything unique to coach. >> when they say lifestyle brand, can you -- what do you think that means? what are they doing differently that they weren't doing before? >> they're going to expand more into -- they already have this in the stores, but they'll expand shoes, jewelry, you know, coats, more apparel. so extending beyond just handbags. making a bigger presentation of some of the other items in the store. >> when you look at what the u.s. did, the negative comps, that hasn't happened very much in the past decade, margins flat, you look at what people are saying kors and high-end
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retailers are taking away, isn't there some skepticism that bleeds into your model? >> there's obviously some investor skepticism. but with this negative comp, i really see it as a function of weak traffic over the holiday season. and that was not unique to coach. >> when you say not unique to coach, there are those who believe, and we're looking at michael kos right now, that they've been taking shares of michael kors. that the coach needs more vibe, so to speak for its goods, kors in fact has it and people are going there. >> i think kors is a new and exciting brand. and i think that there is some -- definitely some interest there. i do believe there's probably some share that is going to kors. but i think both coach and kors can be viable competitors at, you know, high profit margins. >> jennifer, is there any concern on your part that perhaps coach in the united
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states, it's not the high-end luxury brand it once was, that because it's gone so hard and fast into the outlets, that it's sort of cheapened the brand? >> i don't think so. the outlets is really a different channel and a different customer. you know, coach has always been an aspirational luxury brand. it's always been in that $300, $400 range, which is lower than the high end. and there hasn't been a lot of competition in that space. people seeing that coach has done very well, and more competition has come in. but coach really is the dominant player. like i said, very strong management team. and very sbrong brand. so i think that, you know, they're going to continue to do well. >> finally, jennifer, you have a buy. i think the price target is 70. has that changed as of this morning? >> no, it has not. >> all right. jennifer, thanks so much for that. we continue to watch the names
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we're paying attention to today. >> frankfurt has high expectations for the company. over the last decade we've built coach into a leading international accessories company. we're transforming coach into a global lifestyle brand anchored in accessories. that brings us to this morning's squawk on the tweet, what else could coach offer to become a global lifestyle brand? tweet us @squawk street. john paulson, hedge fund manager best known for making big money when he called the collapse of the housing market, now calling the bottoms. paulson said he's bullish on the u.s. economy due to housing. kay kelly is here and she's got more on that story. kay? >> yes, interesting talk last night at the 92nd street y. they had contradictory views on the economic outlook.
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john paulson bullish, anchored in his theory that housing is going to do very well this year. that we've seen a strong recovery already and that's likely to continue. he pointed to a couple of things. he said mortgage rates are at an all-time low. the number of houses available on the market are at essentially a ten-year low. so it's a very attractive time to buy. he thinks this will all put pressure on building efforts and we'll see a much stronger recovery in terms of building new homes than in quite a long time. the most positive change in housing, he said, since the lehman's brothers collapse in september of 2008. he thinks the stock market rally we saw last year and seeing so far this year is heartening. he thinks stock investing is much better in terms of an individual investor opportunity than credit investing, if you look at the overall returns. he also said he's very positive on the u.s. energy market. that we're seeing quite a turn-around there. he noted that chemicals, petro
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chemicals, and other energy related stocks may benefit from this recovery. unclear whether he's investing in some of those names. i looked at his last 13 app, i didn't see a ton of presence in that market. but that's several months old. unclear what he's doing at the moment. he's a little less bullish on credit. he thinks we'll see recovery there, in terms of use of credit cards and auto loans around mortgage purchases this year. but his macro outlook, he's not as excited about credit as he is about stocks and housing. >> kate, as you have reported over the last couple of years, mr. paulson's macro call, so to speak, has not been particularly good. his stock picking has really lacked a lot of press. if i'm listening at this point, i'm tempted to say, given his track record over the last couple of years, maybe i should take the other side of that trade. >> when i was tweeting about this talk last night, i got harsh responses from people,
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including paulson's bullish stock market thesis, the best evidence i've heard yet to short the market, and who cares what this guy thinks. no doubt his assets under management have essentially halved since they peaked about two years ago. he's seen redemptions and double-digit setbacks for two years now in his umbrella funds. his gold fund has also had a hard time. this is the man who made 590% for the year 2007 alone. and then another 20% or so on his subprime or risky mortgage market short in 2006 and '07. he's obviously got other ideas now he feels strongly about. he feels strongly about gold as well. he thinks this will take three to five years to play out. he said since he got into gold in the spring of 2009, it's up about 80%. he thinks it's a great way to play inflation and with the expansion of central bank activity which shows no signs of abating, still going on in one
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form or another, he thinks that's a way to play it so you get a better return than you would in cash. >> right. big in bank america, little early in terms of when it got large. >> that's right. you and i reported it when he started to pare that back dramatically a couple of years ago. >> and european debt also, on the wrong side of the take on that. i don't remember him being in the housing trade, whether home builders or housing derivatives, like the suppliers, et cetera. because some would argue the biggest run in those stocks is over. >> i didn't see a lot of exposure to that. i don't have it in front of me, so i can't say he has none of those names. in his equities, what you see is the gold holdings. whether it's anglo gold, he's exposed to a lot of these names. he got in almost two years before the top in august of 2011. so he was able to take some
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money off the table i think then and enjoy some of those gains. but he's still in it. we've obviously seen a bit of reversal to where we're off those 1800 levels. again, he thinks this is going to play out over the course of years. he says there's a very strong correlation between central bank activity, you know, expansion of their balance sheet and inflation, and if that's the case, gold is poised to do much better. but whether that takes three years, five years, perhaps even a little longer, you guys, anybody's to say. >> we'll see if investors have the patience to wait out three or five years at this point. >> that's right. >> all right. kate, thank you. >> thank you. still ahead on the program, morgan stanley ceo live from davos after a blowout fourth quarter. what's next for this big bank. apple out with earnings tonight after the bell after a 20% drop in shares over the past three months. what are investors really looking for in tonight's report. back in two.
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weather outside, there is a bitter chill from the midwest over the east coast. a live shot of chicago right now. where it's cold. but new york also cold, facing temperatures in january this morning, windchills below zero throughout the region. in fact, a special weather report out moments ago says winds and low temperatures may bring the windchill to around 5 below. a little bit later on today. the current temperature outside the stock exchange is 13. it was 15 at reagan international. guys, that is the coldest since 2009. and embarrass, minnesota, minus 30. so it could be word. two words. >> long underwear. that's the key, man. talking about the weather, of course, this very, very cold temperatures, as you might expect, it is impacting the price of natural gas. let's go over to sharon epperson at the nymex. >> the heating fuels in general
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are definitely going to be beting from increased demand because of these cold temperatures that are going to last for the better part of this weekend. we'll probably see colder than normal temperatures for the rest of the month. for much of the country. that is the latest report coming out of weather services international. we are looking at natural gas, that really has had a tremendous run-up in the last week or so. actually, in the last couple of weeks, it's up 20 cents. it hit a six-week high yesterday. we're consolidating around the level in natural gas and traders say anything above 360 today, we'll look at 375 at the next key level for natural gas prices. the fact remains when you look at what is happening with natural gas and with heating oil, natural gas definitely benefiting a lot more. heating oil, you'll remember, is a proxy for diesel fuel. very much dependent on what's happening with the refinery situation and the oil market. even more so than what's happening with the demand for heating fuels. so natural gas is really the commodity to watch when you're looking at these weather forecasts.
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and traders behind me in the natural gas pit watching very carefully. back to you. >> sharon epperson, thank you. the hottest trade of the year, it is gaining ground against the dollar this morning after the bank of japan announced details of an easing plan. let's get to "money in motion." kathy, good to see you. this was the trade that seemed everybody and their brothers were in. short yen, long japanese stocks. we're seeing a bit of a reversal over the past couple of days. is it over? is the short side on the currency squeezing it higher here? >> i think it's basically pocket taking. the boj needs to deliver everything on point. the decisions begin to open in 2014. it wasn't enough for the markets. you're seeing profit taking. you're also seeing u.s. yields under pressure overall. that's weighing on dollar/yen. these two point factors is causing a bit of a pullback in
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the currency. i don't think that's the up trend -- i don't think the up trend is over. we still have over the boj to bring in a new governor that is going to be a bit more aggressive. as we go to the april nominations, that could lead to a little bit more yen weakness. on top of that, re haven't seen the pullback in the trades as much as you would think after such a big move. i think fundamentally we're potentially headed higher in dollar zsh yen. >> we're back to levels we saw back in may. we basically unwound the entire trade that resulted from people entering the trade probably in the fall, to now. so at what level would you go back in? >> i think you need to give a little more room to downside before going in. around 86 is a good value point. we could continue to see a little more profit taking. i like going long dollar/yen at 86 with a stop below 84.50.
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and a target of 89. that's right below the key 90 level. i'm not too sure if it's going to have enough momentum to burst above there. i think we can revisit that level. if the bmj is successful at getting inflation to 0.5%, that would be consistent with the $95 yen. >> kathy, good to see you. more currency trades. if you want more education about currencies, check out currency in class at cnbc.com. slow and steady may be true for wall street, as dividend stocks topped into the top performers in 2012.
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one hour into trading this morning. ibm is by far the biggest gainer on the dow, up 6% on quarterly earnings. that beat the street above consensus. shares of csx up 3% on the railroad operators, better than expected quarterly results. the tech earnings parade marches on as we gear up for apple's numbers after the bell.
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apple has been sliding over the last three months. although, research in motion is on the rebound. how do you play these two names. eric jackson is an apple and r.i.m. holder. he's also a forbes columnist, jones us on the newsline. welcome back. >> hey, carl. >> a lot of discussion about people being afraid to step into apple before the numbers. worries about the first decline year over year and income at about ten years. is that going to happen? >> it might. i think the headline will be that they meet consensus, which is $55 billion in revenues. and 1350 in eps. i think that will initially cause some consternation and worry. it wouldn't surprise me if the stock were to sell off after hours today on that news. but i think in the coming days, we could see that quickly reverse, and the stock start to rally as people start to say, hey, these numbers aren't actually so bad, and start to look ahead to the positive news
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that's to come in 2013. >> that will depend on the guide, as they say. and whether or not these component order rumors are true, whether or not it's enough to move some of your iphone estimates into the coming quarter. what do you think they're going to say about these reports we've gotten that they're slowing down production? >> i think they will probably take those head-on. i don't think -- they typically don't comment on all the rumors that tend to come out about apple. but i think they would probably address what their supply chain situation is, and probably nip that rumor in the bud. you know, we'd like to hear lots of other news about possible new iphones this year. we're hearing reports of multiple iphones. it would be great to hear about a china mobile deal. but those are things that typically don't get mentioned in a lot of detail before there's an actual announcement. >> eric, to that point, that's exactly what i wanted to ask you. in terms of trading lower in the after-hours session, if they did
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meet, and if they do their typical guidance, which would be a sandbag essentially coming in below consensus estimates for the full year, that's what they've done in the past. let's say they do that once again. we see the sell-off and you say in the next few days apple shares pick up steam. but on what? because they're not going to talk about those new products. that's not typically what they do. they're probably -- you know, they may or may not address the component issues. what is the catalyst at this point with the sentiment so low on the stock. there are not those people willing to give them the benefit of the doubt anymore after earnings i think it's going to be a release rally, melissa. i think people are going to look back at the last six months where the stock traded down from. and sort of say, okay, now i think the worst is over. we didn't get any kind of, you know, calamity in the earnings column itself. don't forget, a year ago, january earnings call, apple disappointed investors by not
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meeting expectations. the stock sold off for about a day, and then it ripped from 420 to about, i think it was 636. >> speaking of ripping, eric, melissa and i were talking about the break during your views on r.i.m. and when you made the turn from short to long. >> right. >> from bear to bull. did you get this exactly right? be as honest as you can. the. >> i wish i had. you know, i think the time to go long the stock was late summer, last august or so, and september, when the stock was really kind of left to die at around six bucks. i got in in november. so i didn't participate in the first part of the bump up. but i felt for a long time, especially over last summer, that the sentiment was so negative on the stock, and people were just forgetting about it. i think i'll be the first to sa was short the stock, because there were a lot of mistakes the company made. but you have to be able to see
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the kind of positives as well that the company does. and it got so cheap, that i think on some good news, and excitement about the new phones, that's what led to the run in the last couple of months. >> the stock, as you know, is up 40% since its october earnings, up 50% over the past three months or so, eric. at this point has the pendulum swung too far the other way about being overly optimistic in the valuation? they've got a platform that they might try to license, but the questions are, to whom would they license and there are questions as to who's going to buy that as well. >> right. i think the consensus view is, as soon as they announce this phone next wednesday, the stock will immediately drop. and it will never return to these levels. i think most people think it's going to be another palm or nokia. i think we could see a pullback for a few weeks after the product launch, because they might say it's going to be a couple of weeks before it ships. something like that.
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but i differ from the consensus in that i do think there will be buyers. i think the big difference between palm and nokia and r.i.m. is that r.i.m.'s got 80 million customers out there who have stuck with the phone this long. and i think if only about a third of them buy this new phone, it will be a home run. and they're predicting they'll lose 50 cents a share this year, if they sold something like 20 million or 30 million, you're talking $3, $4 a share in earnings. it's just going to be a good story that nobody sees coming. >> right. but since you entered the trade, you must be up around 30%, or somewhere thereabouts, eric. at this point, don't you have to take profits, after that kind of gain? >> yeah, i -- you know, it's been a good run. i think the stock was about $9 in november. and we're getting close to $18 here. i do think like there will be a pullback in the next few weeks. that wouldn't surprise me at all. there's definitely a time to
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take the profits. but i'm just saying that i differ from the consensus view that says, you know, this is all hype and smoke and mirrors and this is destined to fail. i think you've got to differentiate there are differences between palm and nokia and r.i.m. >> so finally, eric, you've got two names between r.i.m. and apple, where sentiment has been negative. the stocks obviously on different trajectories. but where is the better money right now? >> the risk here is definitely research in motion. if you can stomach it and willing to put up with the volatility, i think you'll be better rewarded this year, if you stick it out. i think if they do come through and the existing base does buy this phone, i think it could go to $30 to $40 by the end of this year. apple can't see that kind of return. but i think at these levels, you know, getting into apple now is -- you don't have to lose some sleep about it.
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the way that you might with r.i.m. >> yes. lose more sleep is probably the operative term. eric, thanks so much. see you next time. >> thanks. >> eric jackson, ironfire. still ahead, inside the golden arches. mcdonald's is looking to regain its heat, but can it continue to sizzle. we're taking a look inside the quarter, plus the chairman and ceo of morgan stanley joins us live from davos later on in the program. so stay tuned for that. [ man ] i've been out there most of my life. you name it...i've hooked it. but there's one... one that's always eluded me. thought i had it in the blizzard of '93. ha! never even came close. sometimes, i actually think it's mocking me. [ engine revs ] what?! quattro!!!!!
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[ male announcer ] alka-seltzer plus. ♪ oh what a relief it is! ♪ [ male announcer ] to learn more about the cold truth and save $1 visit alka-seltzer on facebook. medical testing company moving lower today. >> that would be quest diagnostics, down almost 6%. this on a couple of pieces of news. the company cut its forecast for revenue and earnings in 2013,
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citing a couple of things, decline in reimbursements and pressure. a couple of hospitals moving their lab testing in-house as opposed to putting it out of house which would be served by quest diagnostics. the company missed by a penny earnings in the fourth quarter. the reason, fewer people taking tests because of superstorm sandy. david, back to you. >> thanks very much, mary thompson. the recent rush for dividend paths has made that space quite attractive. those straying away from the volatility in the market has found a haven in the stocks. should you be setting your money in that group. bob manages over $40 billion in assets. nice to have you here. >> thank you. >> i would imagine one threat to that portfolio is if we are in a significantly rising rate environment. if that is the case, how do you change or position what has been a strongly performing sector in the last year? >> we focus on dividend growth rather than a level of yields. that's where people have
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gravitated to. focusing on dividend growers, we're still finding value. our portfolio is trading to a discount, which is a benchmark. we feel there's upside potential should the economic recovery continue to gain ground. >> taxes on dividend, not that great, but does it perhaps forestall what had been hopes for willingness of u.s. corporations, say let's keep the dividend going up up up? >> i think it was a great outcome, we only went to 20%. but that's only for the incomes above $400,000 for singles and $450,000 for couples, for people under $200,000 and $250,000 for couples still stays at 15%. i think that story is totally intact. >> what is the greatest indicator for the companies? >> we focus for companies that have low debt to cap, that have free cash flow over their financing needs. and also the company expressing
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a rising dividend growth. we also find that managements are more in line with dividend growth because with options being phased out in favor of restrictive stock, they're in line with shareholders. >> you mentioned policy risk. we got off relatively easy versus expectations at year end. but we've got three months here of discussing more tax reform. how much risk is still built in? >> i think now it's going to be more of the risk is rather than revenue side, it's going to be what the spending cuts come through. i don't think there's going to be a lot of risk with the demographics needing retirement income. we've done work that shows a couple reaching age 65. one of them has a 50% chance of living to age 92. so that's 27 years of income needs, and whereas fixed income when rates go up, your coupon's not going to go up, but dividends over time have risen by 1 to 1.5%. >> i'm curious about your
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criteria in picking stocks in terms of dividend growth. apple fits every single criteria except growing the dividend, would not nosily fall into your fund. so is that true? is it in your fund? >> we don't own apple. first, we don't -- every stock that goes in has to pay a dividend. apple only became eligible late last year. but what we look at is apple being kind of a very crowded trade late last year. growth investors were in it, value investors had started buying it. we would be the last -- probably the last buyer resort. we actually passed on that. >> are you looking at it once again -- i'm just curious, because there are so many companies out there with a lot of cash on their balance sheets and they're deciding whether or not to pay a dividend or pay a buyback. if they pay a dividend, they might get incremental buyers like your fund. >> right. in our meetings with company
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management, we actually asked them what is their policy. we like to prefer companies that say they want to pay an increasing dividend year in, year out. like an ibm in the technology space, ten years paid a 14 cents dividend. 2% yield doesn't excite a lot of people. but last year it was up 10 cents, still yielding 2%. the growth in income over the last decade has been phenomenal. >> if we do get a big substantial increase in economic growth, or growth stocks take over as the favored theme among many investors, i would think that would portend not great performance for dind. >> divide more defensive. it protects on the down side. we do get the debt ceiling as a pullback, our fund will do well. in that growth market, we'll tend to lag performance. we'll still participate, but not to the same extent. >> bob, thanks for joining us. >> thanks, david. when we come back, looking to escape from the daily grind of the city.
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the financial elite are meeting at the economic forum in
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davos, switzerland, this week. jamie dimon sat down with our own maria bartiromo. we have more on that interview. maria? >> hi there, melissa. that inte. >> this morning i moderated a panel and it was a big debate on how the financial services sector will evolve. people like axel weber, who you will hear from later on "the closing bell." basically believes the big banks are going to have to split up. and the imf believing the same thing and then there's jamie dimon who continues to defend the large banking-type situation to encourage constant financing of corporations all around the world. talked a bit about that. the panel did get a bit feisty about that, but then we came to the discussion on the london whale and that pay cut we heard about from jamie dimon last week, and he said he was told by
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the board that he would be taking a pay cut given the $6 billion trading loss. i asked him if now that that is behind him will we put this entire issue behind or should shareholders expect more? let me ask you, news last week that you took a pay cut as a result of the london whale trading loss. would you say now that this issue is officially behind you or are there still ramifications around the london whale -- >> i didn't take it, i was given one. which i think is appropriate. the board had a tough decision to make. we had a record year. we had one terrible mistake in the year. look, we've fixed the problem from a financial risk for the most part. we've cleaned up cio and we've changed procedures to make sure we manage the company properly going forward. >> what kind of changes might we expect going forward? >> last year i think $1.8 trillion of capital or credit for consumers or businesses. we had a problem. you know, we've fully acknowledged we undressed
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ourselves in the public. the rest of the bank is pretty well controlled and pretty well managed. >> and now the bank looks forward to the federal reserve c-car event. in march we will hear from the federal reserve on whether or not they will be able to pay out more dividends, do buybacks. we are expecting to see a dividend increase out of jap mo jpmorgan although he did suggest perhaps the buy back would be lower, smaller, than the buyback the bank did last year. i only assume that possibly that has something to do with the fact that the stock has run up. as the stock gets more expensive, he takes his buybacks down. we'll see about that. we're expecting news out of jpmorgan and the entire banking sector going forward but, of course, we are also looking at real debates to continue as far as what happens to the major banks in the coming years. i would say in the last two decades the whole sector was really benefiting from a wave of positives like deregulation,
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like globalization. in the next decade it's completely different because we're actually going to see more regulation. we're waiting on any news out of dodd frank on the volcker rule, how does that affect j.p. more gand and the other major banks and we're waiting on new information on the basel. the basel rules in terms of liquidity and capital were a lot less onerous than many of the banks expected, and that was discussed today. i would say the end result of the panel and the discussion from all the bankers i have spoken to today, melissa, is that they are not saying they don't want regulation, but they want the right regulation. i'll tell you the entire audience today in the panel agreed. they felt that you have so many regulators and bureaucracies today, it does make business going forward tougher and tougher. so we'll see change. in a little while i'm going to sit down with james gorman, the ceo of morgan stanley. he's in the middle of a restructuring of his investment bank. that interview live right here on "squawk on the street."
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i'll send it book to you, melissa. >> thank you so much, maria bartiromo. >> tweet time, what innovative accessory could help coach become a global lifestyle brand? tweet us at squawkstreet and we'll get your responses after this. ♪
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how about your own private island minutes away from your corner office in new york city. robert frank is back on set to explain in today's million dollar minute. >> thanks, carl. i think we should have some video coming up here. cue it up. is d and a house that sells for $19.9 million. it's about an hour north of manhattan. let's take a look. >> looking for a weekend getaway? how about your own private island? this secluded highaway is 50 minutes from manhattan. >> we're sitting on petra island and there are two properties here both designed by frank lloyd wright. >> it includes a cottage and a main residence with more than 5,000 square feet. the deck space totals more than 2,000 square feet. >> it's almost like you're on a
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ship here. you're out in the water, you don't see any land, and it's so peaceful out here. it's amazing. >> bringing the outdoors inside, wright used a rock theme throughout the house. the house was literally built around this billion year old piece of granite called whale rock. it's where the house, the rock, and the island become one. >> it's 11 acres and priced at $19.9 million. >> so what's interesting about this house is the controversy around it. frank lloyd wright started building this house in 1949. started designing it, then the owner ran out of money. so all he had was some sketches. fast forward to 1996. the current owner because some sketches of the house, completed it. the frank lloyd wright foundation said you cannot all this a frank lloyd wright house. so a lot of back and forth lawsuits. so this house officially is called a frank lloyd wright inspired house, and the current
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owner saying it's basically like playing a beethoven symphony. the foundation saying you can't cull this a frank lloyd wright house. whoever is going to buy this for nearly $20 million is going to buy it for the island, for the house. it's 11 acres. >> 11 acres, pay that in the hamptons, you pay $50 million for 11 well-situated acres. >> this is in put number county so not quite the hamptons. >> frank lloyd wright inspired house. >> it's upstate new york, but again you can feel the frank lloyd wright influence. he sketched it. it feels a lot like his houses, but there's some interesting controversy behind this house. >> private island, there's no dispute about the hedge. that's for sure. you have it all for yourself. >> thanks a lot, robert. melissa, what's coming up tonight? >> we have jen gundlach. he went short apple back in may. he's also in the short yen, long japanese equities trade. we'll get an update on that. we're tracking the afterhours action in apple and netflix and
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ed morris will come on and talk to us about oil, where it's headed and nat gas given the cold weather we're experiencing. big show tonight. >> can't wait. see you tonight. see you a little bit, david, assuming you don't break nor news today. >> you never know. >> wrobt, see you later. here is what you missed earlier on. >> welcome to hour three of "squawk on the street." here is what's happening so far. >> our anticipation is we're going to see slow, steady growth going forward. there's no reason, and we might actually see some pickup in the second half if some of the fiscal issues in d.c. are dealt with properly. >> mcdonald's is out with earnings. taking a look at the dow component, coming in with numbers much better than had been expected. >> that's the sound -- >> i think of melissa. >> i haven't had a mcrib in five years. >> but you speak about it
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enthusiastically. >> that is true. >> and you get caught up and say, all right, i'm going to find a reason to justify buying mcdonald's. i'm going to say that i'm not going to look through it. they beat the number and that's what's been going on. >> this luxury end is very challenged, and i would rather buy north strom. coors is doing better than coach. that doesn't necessarily produce something that's good because i have got so many companies that have reported really good numbers that you can buy. >> updated outlook from the imf. it's saying it looks at global growth projecting to increase in 2013 but at a more gradual pace than the previous projection back in october. >> good wednesday morning. we're live at post 9 at the new york stock exchange with a pretty interesting day shaping on the markets. the dow is looking at its highest intraday level since november of 2007, and creeping
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in with it, about 400 points of its all-time high. s&p and still a little stubborn down a point and change. nasdaq is up number ten on pretty good news from tech. speaking of which, google gaining after posting strong earnings and surging ad revenue last night. ibm and amd trading sharply higher after strong fourth quarter results. general dynamics in the red after posting a fourth quarter loss thanks the impact of slowing defense spending. the company guiding well below forecast. morgan stanley ceo's james gorman will join us live from the world economic forum in davos. find out what he has to say about the economy, the state of banking, and a lot more. then there's coach taking a hit. the company blaming its transition to what it's calling a lifestyle brand. is that just an excuse for a bad quarter? we'll break down the numbers. then we'll go inside the s.e.c. find out how whistle-blowers are playing a terrorist ing ing a p.
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and the house is set to vote on the debt limit. we have a member of the ways and mean committee to tell us if he thinks that vote will pass. mcdonald's beating estimates. there are concern over the expected sales numbers for january which the company says are trending negative. nicole miller reagan is senior research analyst at piper jaffray. nicole, good to have you back. >> thanks, good morning. >> impressive quarter or not? >> it was okay. i mean, impressive quarter for the fourth quarter in that december came in positive given how difficult the comparisons were, yes. but like you just said in the intro, january is a little bit of a concern. >> and january, like december, pretty tough comps. i don't know if there is a tougher comp than what they'll face this month, right? >> that's right. i mean, i think the power of this brand is their ability to have, you know, pulled forward what they did in the fourth quarter knowing they were going to lap that difficult compare in december, but that's exactly
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what they did do is just pull forward the comp, and now it's a little bit lackluster. so it's really just some timing shifts here. >> we obviously -- this is an increasingly important space on the margin front. a lot of consternation about the dollar menu, even about what some people call self-inflicted wounds. how much of that is on their tail even though the stock is managing to hang onto the -- into the 90s. is that going to change? >> i don't see that changing. i mean, i think that there is a defensive play here to some degree. we're seeing a lot of investors interested in the dividend stocks within the restaurant sector. that being said, if you can take the risk and you're looking for the beta, competition is fierce and as big and great as mcdonald's is, they can't really offset the macro on the competition and i kind of like what burger king is doing with their buy one, get one free promoti promotion. >> you favor that over mcd right now? >> we do have both in overweight.
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i think they're different investment profiles. again, mcdonald's is a safe haven defensive play. burger king is very contrarian, very misunderstood, and not well covered. >> interesting. how about the macro picture. the u.s. showed some improvement. we were talk this morning about how the u.s. was sort of mcdonald's silver lining where it was the source of trouble for a company like coach, but why would the u.s. be doing better than asia-pacific, which for a long time was outpacing the rest of the world? >> i think that the consumers have really -- anybody that was going to fall out, has fallen out. there's nobody left to drop out. and so now it's just, you know, where are you going to show your loyalty from a consumer perspective and to some degree they're still chasing those promotions. >> speaking of promotions, does there need to be a change in strategy when it comes to pricing? right how long can they keep this dollar menu as competitive as they are? >> i don't even know that it's technically a change in the surprising strategy for which
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mcdonald's is the best. we have thn working with a third party for more than a decade and they understand pricing tiers better than anybody in the industry. that being said, what you promote and how you promote it absolutely has to change. it has to be dynamic, flexible, and focus on value. >> yeah. they have a new -- obviously a new ceo in don thompson. they have jan fields is out as the head of u.s. do you think the management there is showing signs they understand the problem or are addressing the problem? >> i think so. there's going to be a lot of questions on the conference call that's just starting right now around the human capital structure, but, you know, this is a team that's, you know, very tenured, and they tend to put good people in those spots, and, you know, that's the one thing that we always look to is what's the brand equity, human capital trumps financial capital, and, you know, i would definitely bet on mcdonald's and not against them. >> nicole, have fun in new orleans. nice football game going to be played there in a couple weeks. we'll see you next time. >> thank you. >> nicole miller reagan join us
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from piper. >> coach slides after its quarterly results this morning. the company saying it's transitioning to a lifestyle brand. hey, herb. >> this is one of those deals, i go through a ton of releases this time of year. i'm looking for trends and ekts cueses. anything that is sticking out like a sore thumb. and with coach it was just so obvious when you read through the earnings release. when you saw that quote where they said they are transforming themselves into a global lifestyles company anchored in accessories. the minute i saw that, yes, carl, i did tweet it out, and i also did say to myself, it is game over for the story of coach as we knew it, mostly as a fast-growing handbag company. one look at the company's earnings and sales growth and it's really easy to see why the company is trying to position itself and spin itself with this story.
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look at this chart. it is off a cliff. sales growth of 3.8% last quarter. that compares going back with 10.6%, 12%, 16.6%, all in the midteens. the same with net income. this clearly caught analysts off-guard, and on coach's earnings call, one analyst flat out wanted to know if the transition is the result of bad market conditions. the company said the transition to a lifestyles brand has been going on for two years, but going back quarter after quarter, call after call, investment conference after investment conference, went back through those transcripts. i never saw them say once they were transforming themselves into a lifestyle brand. just that they were transforming themselves into a modern accessories brand with the word lifestyles used several times. i have to tell you guys something else here, and that is look at the margins. operating margins, still very strong, but as keith mccollough tweeted out, he said, look, sales, earnings growth falling and high margins not a good
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combo. back to you. >> does it sound to you, herb, like they want to be coors? is that what's lying under all this? >> it's anybody's guess. what it sounds like is they got to do something, and they're putting the best spin they can put on this story forward today. >> cramer thinks there might be a thesis in being old, like a tiffany, having been around for a long time. >> and, by the way, i think you have probably said it, lou frankfurt is going to be on later today on "closing bell." it will be interesting to see how he spins it there, and if we can catch him in the spin if it is a spin. maybe he can come up with something good here. >> thanks a lot, herb. herb greenburg back at headquarters. the chairman and moceo of morga stanley, james gorman will join us live. you do not want to miss that. bu, get married, have a couple of kids, [ children laughing ] move to the country, and live a long, happy life together
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let's get to maria bartiromo joining us from the world economic forum in davos, this time with morgan stanley's ceo. maria? >> hi there, thanks so much, carl. i'm with jam morgan right now. james, it's nice to see you again. >> great to be here, maria. >> thank you so much for joining us. i want to kick it off with really what you're doing at morgan stanley. you have talked over the last week about the repositioning in deleverage mode. tell us where you are in the process and what we could look forward to in terms of your continuing to deleverage and reposition morgan stanley. >> we felt last week was an important time to reflect on the
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changes that we made in the past, but more importantly the opportunities go forward. we called it deliberately a pivot moment. we felt for our employees, clients, investors to understand that we are confident as a management team about the direction we're now headed in. specifically the potential to buy the rest of smith barney and create one of the top three wealth managers in the world coming on the back of very strong earnings was an exciting possibility for us. we wanted to lay that out there. the hard decisions we have made over the last year and a half and will continue to make. reducing the amount of capital we have tied up in some of our trades businesses because improving those returns is a function of both generating higher earnings from the higher revenues but also reducing the capital needed to support it. so these were parts of the plan. we thought it was time to lay it out there, be clear about, it lay out some goals for our investors to see, and move forward. the market obviously responded well.
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>> the market responded very well in terms of the stock price. we had seen the entire industry rally, and morgan stanley was really the leadership in the last week certainly. let me ask you about the smith barney, buying the rest of smith barney. it seems it's such a sweet spot right now with you having so much money moving into equities and being an enormous sales force. what kind of opportunity does that present and is that a 2013 affair, finishing that acquisition? >> we hope so. we have an application in now. it's obviously subject to regulatory approval by the federal reserve, and we'll find out in time whether that's approved or not and if not we have a longer term schedule over two years to buy it in, but we're excited for the reason you talked about. one, we've done the hard yards. we spent three years integrated what was nearly 40,000 employees. that's effectively finished. number two, the markets, as you point out, they're recovering. investors had something like a 15% increase in their 401(k) plans last year. housing prices have recovered.
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the net wealth effect is increasing the confidence of investors to participate, and there's obviously a rotation from bonds to equities. so the story and the opportunity there is tremendous, and importantly we're well-positioned to serve our clients. >> it's interesting because for a long time we kept saying, oh, all this money sitting in money markets and this money on the sidelines and we're finally seeing a move back into equities. do you think it's sustainable though? and what is it based on? you said housing has turned, but are we actually seeing a fundamental change in the economy that actually continues this market rally? >> firstly, we manage $1.8 trillion, and what's been interesting to me having been in and watched this business for a long time is how stable that money was through the whole financial crisis. that told me that as soon as investors got the sense this thing was turning, that money would move back into equities, it would be actively invested. that's what we're seeing. on the broader economy, i've been bullish for several months. i believe the markets are reflective of the macro environment.
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the three big issues that have been out there the last couple of years were, one, the turn of the u.s. economy. it's clearly happening in my view. number two, that europe has bottomed and the risk or the fear of a breakup of the euro is not likely anymore, and that's clearly the case. i think draghi has done a terrific job. and number three getting through the leadership transition in china and further stimulation in china. all of those three things are more positive than they have been at any point in the last several years. >> in no doubt about it. in terms of europe. you have the election in italy, bonds due, interest on the bonds due in spain. do these represent hiccups do you think? >> i think they're just challenges or marks in the journey. look at what the progress has been in europe. the progress with the fiscal constraint in portugal, in ireland, in spain. the role monti has played in italy and the leadership he's given that country. the steadfastness of merkel in
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germany. the fiscal restraint in the uk. all of these are saying we get it collectively. we need to show restraint, but we need to restructure at a pace our societies can absorb so we're going to have a continued series of steps. there's no big bang answer. >> speaking of the u.s. for a moment, a number of banks are getting out of fixed income. you're sticking with it. why? even though we've seen a big drop-off in fixed income and equities have been the place to be in terms of flow. >> yeah. honestly, there are very few if you really peel it back, there are very few that are actually exiting fixed income. what a lot of them are doing is bringing down the amount of balance sheet and, therefore, capital required to support that business. and, frankly, i think we've been as aggressive as all but a couple in that regard. and we laid that out at the investor call the other day. the reason is pretty straightforward. it's a heart of business to generate returns given the amount of capital you need. so pick the parts of business that are most attractive, focus
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on those, and pull the capital out of those that are least attractive. >> at the same time you and your colleagues in the industry are facing more regulation going forward. >> yeah. >> versus a very different story certainly for the past two decades. tell me where the onerous parts of this regulation are. what are you waiting to see? is it the volcker rule? are you expecting we're going to see regulation get tougher and how do you deal with it? >> i take regulation at two or three different level. s there's the two or three things that really matter. it's the agreement around capital, liquidity and the restraints on leverage. we have doubled our capital, doubled our liquidity and cut our leverage by two-thirds. that really matters. then there's the regulation that matters but isn't at that level, it's at the business unit level. will derivatives be traded through exchanges or not? how much business can you have
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in merchant banking under the new volcker rules? can you own hard assets in commodities businesses? they're business unit specific and every company will deal with those on their own merits. >> so you're expecting in terms of the basel regulations, that was less onerous than anyone thought. are you expecting this issue to be behind for now? >> well, i think it's still onerous to be fair. all of the banks are operating with much higher capital liquidity than they were precrisis, but we and most of us have already adapted to that. so the big stuff has been dealt with. now we're working through the various parts of dodd frank, the local idiosyncratic regulation by country and foreign insution. there will be tenders coming from that. for example, we have reduced the amount of cal tal we put into our various banking activities. we have closed our proprietary banking activities. these are real changes. >> you have said a lot of positives about the u.s.
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economy. what about around the world? are you seeing opportunities? where would be the best use for your capital? >> well, i think firstly you have to look at china. it's the second largest economy in the world and in not too many decades will be the largest. they've come through a l leadership transition. there will be enormous demand to build a domestic demand driven economy so china is a huge opportunity. we forget about india, indonesia, and brazil which remain very important growth engines around the world, but what really matters right now, what really matters is the u.s. and what really matters in the u.s. is the u.s. consumer, and what really matters to the u.s. consumer is confidence. so leadership out of washington is the primary driver behind consumer confidence which will drive consumer behavior, will drive the employment, and that will be the world's engine of growth. >> quick final question here. your brokerage business profits
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more than doubled. you have a good story to tell with the recovering and repositioning. now investors want to know about buybacks and dividends. what might we expect? >> our focus from a capital planning is strategic. let's get the smith barney business under our wing, own all of that, and generate the benefits for our shareholders. then we'll move on to discussions with buybacks and dividends. >> james, it's good to have you on the program. >> great to be here. >> good to talk with you. james gorman is ceo and chairman at morgan. i'll send it back to you. >> great stuff. maria in davos. the house planning to vote on the debt limit in the next hour, but some conservatives are waging a last-minute battle to defeat the proposal. republican member of the house ways and means can go, congressman aaron schock will join us live a little later on.
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a share, revenues of $54.73 billion. travis mccourt joins us on the line. >> good morning. >> people stepping in front of this, are they misguided or not? >> i don't think so. i think this is a bit of an overreaction of fear. you know, in our mind nothing much has changed since the summer. it was pretty obvious in the summer their year-over-year growth was slowing down pretty dramatically. stock ran up from $600 to $700 pretty quickly on rumors of big builds for the iphone 5 and now the stock has sold off on rumors of very big cuts on the iphone 5, but i think the sell through of the actual products are kind of, you know, similar growth rates as we saw this summer. >> yeah. when you get the release in your hand or on your screen, what is the number you will look to first? is it iphone for the quarter and if so what's your number? >> we're at $48 million which i
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think is consensus. i think the guide -- and we've gotten enough data points from verizon and, at&t, and across the world where that seems pretty reasonable. you know, i think the question mark really revolves around the march guidance. there's a couple of things that will make this march a little more difficult than last march, primarily last march apple shipped in a couple million iphones into the channel to build channel inventory. also last march was the china launch quarter, where this year the china launch quarter was in december. so march is a more difficult comp and that's the harder one to judge in terms of, we know and everybody knows seasonality is going to be a little steeper decline in march this year in all likelihood for the iphone, but how steep that decline is is kind of the debate. >> interesting. classically they have tended to provide conservative guidance, and i wonder if you think they might take the edge off on that, maybe not guide so conservatively given how much
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pressure the stock has been under for the past few months. >> i don't think so. i mean, look, i have a lot of respect for this management team. i don't think they are doing things to drive near-term stock psychology. the question will be when they do guide conservatively, will people still believe that it's just typical apple conservative guidance or will they, in your opinion, overreact and maybe believe it's the real deal. >> that is a good point. and so much to watch for, whether it's china or new products tonight as well. tavis, thank you for your time, we'll see you later on. >> all righty. >> tavis mccourt. as the house gets ready to vote on raising the debt creeling in the next hour, we'll talk to a house member of the ways and means committee and why the no budget, no pay provision is so important but is it constitutional? "squawk on the street" will be right back.
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the european markets are closing now. >> as you can see, mostly red around the continent today. let's bring in michelle caruso-cabrera to tell us how the uk and continental europe closed. >> the huge story in uk, david cameron announcing he will get the british vote in membership on the european union. that sounds like an existential threat to the 27-member bloc as it currently stands, doesn't it? keep in mind cameron said he would allow the referendum to happen sometime between 2015 and 2017 if he's re-elected.
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i'll lose 20 pounds in six weeks if i eat less and exercise more. that being said why mean to minimize what he said. the mere fact he's putting it on the table highlights the struggle the european countries face. if your country does not like certain policies imposed by the bureaucrats in brussels, what do you do? the uk does not like the new financial transaction tax because they are the only ones who a large degree with any financial transactions to tax. but he did it in a way that really isn't threatening, at least not yet. so another piece of news that's key, spain's central bank says the country's recession got even worse in the fourth quarter contracting 1.7%. this is spain's second recession. it's economy contracted from 2008 to 2009. a terrible recession. we covered it a little bit for a couple years, now suffering through the double dip. you can see the ibex moved barely today. the country of portugal borrowed money today. it's the first time it's been able to do so since it's financial rescue in 2011.
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report indicate investors were willing to lend them 10 billion euros. they were able to lower the interest rate. they may less than 5% for the$. their five-year paper. here is the ten-year yield. the ceo of i kia giving an interview, saying what some years ago took two to three years now takes four to six years. we also see there's a lot of hidden obstacles in different markets and also within the european union that's holding us back. that's the huge swedish furniture store with the beautiful blue all over it. back to you. >> maybe they can move to bulgaria or russia. everyone is doing it. >> see you later. >> michelle caruso-cabrera. let's get to mary thompson with some news this time on whirlpool. >> stock moving higher, up 2.5% on the news that the u.s. trade ban panel gave final improve to
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impose anti-dumping duties on washington machines from south korea and mexico. the u.s. international trade commission voting 6-0 in a case brought by whirlpool that said the company had been materially harmed or was threatened with material harm by those other manufacturers. so, again, you can see its stock popping on the news. >> one of the best performing stocks of the year, last year, too. let's bring in brian shactman. we've had a bring of positive days, nine out of ten, in fact. >> dow is up. a lot of that is ibm and microsoft. interesting you say that, carl, i'm really focused on the s&p. those are specific stock stories driving it. tech is driving whatever rally we have today. talk about ibm driving the dow, good for about 70 points-plus and google powers the nasdaq.
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microsoft up a percent plus apple. pulled back a little from earlier highs. we'll see if it's a sell on the new situation with matheir earnings numbers. united technology and 3m at heightest levels since 1945 courtesy of our research team. this is a lot of iconic names hitting historical or multidecade highs. you go to heinz dating back to 1946. clorox, 1972. cvs, 1968. sherwin-williams, 1964 and union pacific seeing highs not seen since 1969. facebook, zuckerberg was not born in any of those years. up again today, 1.5%. off the highs of the year. that's a one-month chart. up double digits. now about 17%, 18% below it's ipo price. that is not out of reach. finally on the negative side, hospital stocks him some new highs yesterday. it seems there's some sentiment at least on the technical side
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they're overbought. all of them getting beaten down pretty good today. >> thanks so much. meantime, some house republicans unveiling legislation this week that could suspend the debt ceiling until may 19th. that sets the stage for a possible floor vote sometime today. our chief washington corner john harwood is live in washington with more on that. good morning, john. >> good morning, carl. we have a fascinating test coming up probably within an hour of the evolution of this house republican majority. what i'm talking about is the proposal that you just made reference to to suspend the enforcement of the debt limit until may. the leaders have attached to this a provision that unless budgets are passed by the house and senate, the pay of members of congress is going to be withheld. nobody knows if that's constitutional and everybody knows it is a cover for a strategic retreat from the principle that john boehner articulated earlier that the only amount of debt limit increase that's going to pass is going to have dollar for dollar spending cuts. that's very hard to do, for
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democrats, for republicans, for anybody in washington, and so he's backed away from that, and now he's going to try to see if he can pass it with republican votes. the importance of this principle from a democratic point of view is they've broken with the idea that the debt limit is so important that it needs to be enforced. that's why senate democrats say they will pass this next week by an overwhelming margin if it passes the house. the white house says it won't block it and house democrats, if you read between the lines, they're urging their members to vote against it, but they don't mind this proposal one bit. here is chris van hollen, the ranking democrat on the house budget committee today. >> the good news is that our congressional republican olleagues have finally recognized that america must pay its bills and meet its financial obligations without condition. the bad news is they only want to do that for three months. just read the title. to ensure the complete and timely payment of the
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obligations of the united states government until may 19th. >> now, if this passes the house today, you could pretty much bet that the existential threat that many in the markets have looked at from the potential doomsday scenario of a default is simply going to melt away in front of o our eyes. however if it doesn't happen, we don't know how john boehner will find a way forward. it happened on plan b and the deal only got worse from a conservative point of view. we'll see how conservatives make pragmatic decisions today or not on voting to pass this bill. >> fascinating chess game happening right before our eyes, john. thank you so much. want to bring in congressman aaron schock, a republican representative from illinois. a member of the house ways and means committee. congressman, good morning to you. >> good morning, carl. >> you heard van hollen reference that language, the complete and timely payment of obligations until may 19th. a good idea or not? >> well, mr. van hollen is
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trying to have it both ways. here is the guy that's the ranking member of the budget committee. he was the chairman of the budget committee when democrats controlled the house, and guess what? they didn't pass a budget. so now democrats are acting like, oh, this is no big deal. senate democrats are saying, sure, we'll pass a budget. why aren't they say in the last four years? it's because they don't want the american people to see how much taxes they want to increase in order to balance the budget, and the fact that they're not willing to make changes to medicare and social security to save them. the problem for us in the house honestly, carl, is that we've been negotiating with ourselves. we've put out budgets and passed them. we've talked about entitlement reform, talked about tax reform, but nobody else is talking with us. the senate has been completely silent. the president has gotten away with just criticizing what the house has put forward. what we have simply said is based on our constituent feedback, which is why is the senate getting away with not passing a budget even though there's a law, the 1974 budget act, that requires congress by law to pass a budget?
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what's the enforcement of that? well, there's going to be enforcement after today. and the enforcement is you're not going to get paid like most of the american people do when you dornt do your job. >> right. salary would say go into escrow until the chamber does pass a budget. questions about constitutionality about that though. what do you make of them? >> well, look, we wouldn't be passing it if we didn't think it was constitutional, and the fact of the matter is if the house of representatives passes this with a majority instructing the treasury to withhold our pay if we don't pass a budget, we believe that's constitutional, as does the senate. if you vote with the majority vote, you can withhold our pay. look, what are we talking about if we hit the debt limit? we're not going to pay military personnel. we're not going to pay all those other things we're contractually obligated to do, the same thing with our own pay. if we can't start with ourselves, how can we threaten anyone else's pay? >> people are making a big deal
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on this retreat from insisting on oneton one spending cuts. i wonder if you feel the gop is in retreat and if you disagree with that retreat? of all, you wouldn't get -- assuming that we can pass this today, that assumes we get 218 republicans to vote yes. you wouldn't have our most arch conservative members, chairman paul ryan of our budget committee, eric cantor, john boehner, you wouldn't have them singing out of the same hymnal if we are retreating. we have never been more unified behind a position than we are now. i feel pretty confident we're going to pass this today. what this really is is moving away from playing small ball, cutting $100 billion here, 100 bmds there. we're running multitrillion dollar deficits. we've gone from $10 trillion in debt to $16 trillion in debt in the first four years of this presidency, and we now recognize we got to save this president from himself, and we're not going to do it by nickel and diming every two months, three months, four months. we've got to lay out the vision for america that we have, how do
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we save ourselves from a debt crisis, and force the senate to put forward their view of how we save ourselves from a debt crisis. let the senate lay out its tax proposals. let the senate lay out its entitlement reforms if they have them. and then we can have an adult conversation once the senate passes its budget and the house passes its budget. >> right. but you say if they have them. what makes you think that there is any more fertile ground for reform this week or next week than there was at the end of last year. >> i agree with you that the senate hasn't had those ideas, which is why we're calling the senate's bluff today by saying pass a budget or don't get paid. and you see that senator murray, the chairman of the senate budget committee is saying, oh, trust us, we're going to pass a budget. chuck schumer this weekend says, trust us, we're going to pass a budget. they haven't passed a budget in the last four years. so this bill today moving out of the house will force the senate to act, which is something they
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have not done in the past four years. >> right. finally, congressman, for the most conservative republicans who say even a three-month extension to may 19th is wrong, are you trying to back them off of that ledge and say we need to speak with a unified voice and at least get this done even if it is a short term? >> yeah. look, i think the reason why jim jordan, the former chairman of the roc, the current chairman of the roc, the republican study committee that's the most conservative members of the republican chamber, they have all endorsed this because they realize that if you really want to fix the debt, if you really want to cut spending, you have got to do big things. it can't just be little cuts here and there. so they agree with the strategy here, which is really to move beyond the debt limit discussion right now that we're having and get to the budget discussion, which is really where you make the big fundamental changes. think about a lot of your viewers today are business guys. how do you make structural changes in your business? it's through your long-term
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planning and through your budget. playing this small ball month to month is not a good strategy for us to get the senate to act, to get the president to finally negotiate with us on those big ticket items. >> congressman schock, good to have you. i imagine we'll be speaking a lot over the next few months. thanks four your time. >> look forward to it. thanks, carl. straight ahead, we'll go inside the s.e.c., talk to the whigle blower who blue the lid off one of the biggest scams on the street. we're back after a break. ♪ [ male announcer ] to hold a patent that has changed the modern world... would define you as an innovator. to hold more than one patent of this caliber... would define you as a true leader. ♪ to hold over 80,000... well, that would make you... the creators of the 2013 mercedes-benz e-class...
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♪ coming up on "halftime," the stakes could not be higher for apple ahead of earnings. will the company post a blowout or plain blow it. will washington extend wall street's rally for another three months? we'll bring you the debt ceiling vote live. and coach tumbles on an earnings miss. why does one trader say buy and another say bail? we'll debate it. >> see you soon. what would it take for to you blow the whistle on fraud where you work? the s.e.c. wants to make it more enticing. we're going inside the s.e.c. in our series "crime and punishment." good morning, scott. >> this is a big priority for the s.e.c. and it happens to be mandated ander under the dodd/frank financial reform law. when it comes to dealing with whistle-blower tips, the s.e.c. doesn't have the best track
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record. >> i gift wrapped and delivered the largest ponzi -- >> harry's tips on madoff famously went nowhere but now things have changed. >> i said, holy cow, this is weird. the government doesn't work this fast. i worked for them. former irs accountant dee dee stone, now in private practice, was handling the books for this man, ron allen, who controlled a string of limited partnerships in dallas. >> these companies had no sales, but they had all the loans, and the only assets they had were receivables from other related companies. >> convinced the whole thing was a ponzi scheme, she snuck into the office on a weekend and found all the evidence in one drawer. >> you could see where the money was coming in from investors and being transferred out to his companies and to his wife. >> were you scared? >> i was. i was terrified. it was a sunday so it wasn't real likely anyone was going to come in. >> no one came in and stone
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brought her findings to the s.e.c. in april, 2011, a federal judge shut down what the s.e.c. called an $8 million ponzi scheme. without admitting guilt ron allen and his wife agreed to pay more than half a million dollars and dee dee stone collected a bounty under the new s.e.c. whistle-blower program of nearly $50,000. reluctantly, she says. >> my job is to protect my clients, so it didn't feel like anything that i should get an award for. >> shaun mckesy heads the s.e.c.'s two year old office of the whistle bleer. >> if there's a perception out there that whistle-blowers aren't welcome at the s.e.c., one of my jobs is to make sure people know that's not true. >> the new system is a marked improvement, but just a start. >> it worries me a little bit that there's only been one award and it's only been $50,000. $50,000 is not really going to encourage somebody to put their career at risk and provide
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information to the s.e.c. >> katz now a director at berkeley research where he looks at this from the outside. sean mckesy says people are coming forward. in fact, about eight calls a day on average. what can you expect if you do blow the whistle? one thing is anonymity. sean mckessy would not even confirm dee dee stone's identity even though she wanted to come forward and everyone gets a call back within one business day. that's policy. harry gives high marks to all this. he says the s.e.c. was an anti-knowledge agency and now it is a learning agency. we've got a lot more about our look inside the s.e.c. tomorrow gary kaminski looks at some of the high-tech ways the s.e.c. is trying to stay ahead of the fraudster and on friday we will talk to one of the men most responsible for this transformation as he prepares to leave, robert khuzami, the
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director of enforcement. you can record about this at investigations inc. it makes you wonder if people are really after the money or anonymity. that's not a lot. >> and that's part of the issue. and a lot of companies have said that people are going to come forward just for the money, they're going to skirt internal controls. the s.e.c. says that doesn't seem to be happening. that they are going through the channels where they work before they go in, but this whole issue of the money and $50,000 for a tip, $50,000 for all of that trouble, that's something that davidk katz says is an issue an they will be looking at that going forward. >> netflix gained in the last quarter. we'll be talking some nfl x. ♪
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x. [ watch ticking ] [ engine revs ] come in. ♪ got the coffee. that was fast. we're outta here. ♪ [ engine revs ] ♪
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netflix has seen a steady rise over the past few months but what can investors expect tonight from the streaming subscriber number? julie is live with more on that. >> the big question is how fast it can grow streaming subscribers to offset growing content costs. shares are trading higher ahead of this afternoon's earnings announcement. they're up more than 3.5%. the number to watch is netflix's
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domestic streaming subscribers. analysts expect 27 million in the fourth quarter and 28 million in the first quarter of 2013. and wall street is projecting netflix to swing to a loss of 13 cents per share as the company invests in international growth on 7% higher revenue of $934 million. first quarter guidance will also be closely watched as wall street looks to see how netflix expecting original content to drive subscriber growth. another area is international expansi expansion. analysts expect 5.5 international streaming subscribers in q4. it's been quite a roller coaster for netflix stock and one wildcard is activist investor carl icahn who acquired just less than 10% of the company's shares this past quaul. i'll be setting down with ceo reed hastings for an exclusive
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interview which we'll bring to you first thing tomorrow morning. >> the quarter had this christmas eve outage. it had the disney deal. there's a lot to ask him about. seal what he happens tonight. thanks a lot. julia boorstin in san jose. don't forget to tweet us. after missing earnings and revenue expectations, the ceo of coach says they're transforming in a global lifestyle brand anchored in accessories. what innovative accessory could help coach become a global lifestyle brand? tweet us. ♪ reach one customer at a time? ♪ or help doctors turn billions of bytes of shared information... ♪ into a fifth anniversary of remission? ♪ whatever your business challenge, dell has the technology and services to help you solve it.
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yahoo! just announcing it is buying social news startup snippet for an undisclosed amount. the site can be described at pinterest for news lovers and the acquisition could help yahoo! make more of a push into the social media realm. snippet's ceo joined us on squawk on the verge back in november. >> about 30,000 people creating content on the site. people who are browsing the site for comment have been in the millions so far. we're targeting to get that to more than a million creators and hopefully hundreds of millions of browsers. the end game is to be the primary way through which people share and discover content.